Meta misses earnings forecasts after Zuckerberg's AI media push

Meta's stock plummeted nearly 8% after the company announced weaker-than-expected second-quarter earnings, overshadowing CEO Mark Zuckerberg's recent media campaign advocating for artificial intelligence.

Despite Zuckerberg's optimistic op-eds, including one in The Wall Street Journal envisioning a world with widespread access to super-intelligent machines, investors reacted negatively to the financial results. Meta posted earnings per share of $6.18, falling short of Wall Street's $7.14 expectation. However, revenue did slightly beat predictions, reaching $60.8 billion against an expected $60.23 billion.

The company also revised its financial outlook upward for expenses and capital expenditures. Chief Financial Officer Susan Li noted $2.4 billion in charges related to legal proceedings in the second quarter, contributing to a raised total expense range of $165 billion to $169 billion. Furthermore, projected capital expenditures for 2026 were increased to $130 billion-$145 billion, up from $125 billion-$145 billion, with a significant portion allocated to AI investments.

This spending on AI infrastructure has become a focal point for investors and analysts, contributing to a year-over-year stock price decline. Big tech firms like Meta are under pressure to demonstrate the value of their AI initiatives to justify the substantial cash flow being consumed. The market's reaction to Zuckerberg's upcoming earnings call commentary will be crucial in determining if his messaging can alleviate investor concerns.

While Meta has faced challenges in developing AI models competitive with rivals like OpenAI, the company plans to launch a cloud business to sell AI compute power. This move, reported earlier in the month, offered a brief boost to investor confidence amidst the stock's decline. Zuckerberg has also reiterated his belief in decentralizing AI and fostering an era of personalized super-intelligence, though the specifics of Meta's approach remain unclear.

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As a thought experiment, imagine only one person had a super-intelligent lawyer. He would have an unfair advantage in court. That would lead to a worse society. But now imagine everyone has a super-intelligent lawyer. Justice would be carried out much more fairly and efficiently than it is today.